PPI Creeping Higher in Europe, Raising Hopes for a Higher CPI Inflation
Inflation has been softening in Europe during this year, and a few months ago the main inflation measure, the CPI (Consumer Price Index) turned negative. Last week, the October inflation report showed that the CPI YoY had declined by 0.3%.
Besides the economic slowdown, the decline in inflation is a major reason why the ECB remains dovish, and it will probably turn even more dovish in the coming months. But, the PPI inflation improved in October, and hopefully, it will have some positive impact on CPI inflation in the coming months.
Eurozone October PPI Report
- October PPI MoM +0.4% vs +0.2% expected
- September PPI was +0.3%; revised to +0.4%
- PPI YoY October -2.0% vs -2.3% expected
- September PPI YoY was -2.4%; revised to -2.3%
Producer prices crept higher in October, but on an annual basis, it is still sitting in deflation territory. This is a lagging and proxy indicator of inflation, so there’s not much to gather from this release. On the other hand, the unemployment rate ticked higher, from 8.3% to 8,4%.
Latest data released by Eurostat – December 2, 2020
- October unemployment rate 8.4% vs 8.4% expected
- September unemployment rate 8.3%
The usual caveat applies when looking at the data above, namely that the furlough programs across the region have muddied unemployment and jobless figures, so it has been difficult to really extrapolate much from this data in recent months.
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